Dr Kamal Monnoo<\/p>\n
The current steps taken by the present government to address market distortions cum non-economic malaise are very welcome, at best these are short-term solutions that essentially provide a window to undertake broader market reforms to address the real un\u00adderlying economic issues being faced by Pakistan\u2019s economy today. Let compla\u00adcency creep in by assuming that everything is moving in the right direction and before one knows the window for ringing the re\u00adquired reforms gets closed and the economy gets back into the previ\u00adous tailspin. Therefore, it is impor\u00adtant to quickly build on this will and newfound resolve of the state and on its recent operational ac\u00adtions, by following up on these ef\u00adforts through some prudent policy\u00admaking that truly aims at making the economy sustainable over the long term. Ensuring border con\u00adtrols to check smuggling and cor\u00adruption, checking parallel dollar market functioning to erode the central bank\u2019s influence cum au\u00adthority over markets and stopping thieves from stealing a state\u2019s pow\u00ader production or for that matter robbing any of its enterprises, all givens in developed and progres\u00adsive global economies and rare\u00adly come even under discussion on economic management. The mere fact is that the state of Pakistan and its machinery had slipped, became complicit and involved in self-en\u00adrichment and now correcting its sins through some soul searching by the new boys in the hot seat!
\nSSWMB MD finalises 12th Rabi-ul-Awwal arrangements What one needs to remember is that all these years that have led the country to be where it is (eco\u00adnomically) today, there has been a consistent history of fiscal excess\u00ades. In the process, Pakistan has to ask for so many IMF bail-outs over the last half a century that the Fund itself seems to have almost given up on us. Also, an ever-grow\u00ading state footprint on the econo\u00admy has meant that due to crowd\u00ading out of the private sector the capital has mainly been in ineffi\u00adcient hands, thereby today reduc\u00ading the private sector to a paltry 15% of the economy from perhaps a historically high of around 38% in the 60s and then almost 33% in the 90s. The SOEs have contin\u00adued to post un-sustainable losses, leaving the government in a posi\u00adtion where it has to corner almost 85% of the market debt in circula\u00adtion just to keep operational; this in an artificially high-interest rate environment, in turn making it ex\u00adtremely difficult for the state to even meet its debt servicing obli\u00adgations without resorting to fur\u00adther borrowings (a debt trap).
\nKarachi tops world\u2019s most polluted city list Then, there is also the exter\u00adnal debt of more than $130 billion with little to show for it. Forget Mil\u00adton Friedman\u2019s recipe of economic management advising that the ide\u00adal size of the state is where it is tiny and its role in the economy non-ex\u00adistent, even by Keynes\u2019s yardstick today\u2019s size of the government is totally unwieldy and needs to be re\u00adduced. However, the trouble is that if it does so now, given the current malaise this by itself will not be enough. There is a strong argument that the real tangible size of Paki\u00adstan\u2019s GDP may well be below $300 billion, implying that its foreign debt at almost 45% is not service\u00adable without an outright haircut or some serious restructuring; the fact that quite a big chunk of this hastily acquired debt is actually quite ex\u00adpensive makes the equation even worse. Well, on a brighter note, for\u00adtunately, economies right in our neighbourhood have successfully performed this Houdini Act, cour\u00adtesy of a stable government ensur\u00ading continuity of policies.
\nSindh CM suspends four professors in surprise visit Not very long ago we had an ec\u00adonomically weak and struggling India and our ex-part Bangladesh was placed in the bracket of poor countries requiring the primary focus of global economic aid. To\u00adday all this has changed where\u00adby the economic turnaround has been brought about by the real stakeholders in generating pro\u00adductive economic activity, mean\u00ading the private sector through some sound economic gover\u00adnance and oversight. If there is a will, there is a way. The situation is by no means irreversible. Right across our shores, the then-new Sultan of Oman rescued his econ\u00adomy from the very brink of a prec\u00adipice: GDP growth rate had fall\u00aden to under 2%, the external debt had risen to almost 94% of GDP in 2019, the current account defi\u00adcit had swelled to almost 15% and the non-oil economy had shrunk to below 4%, all primarily owing to poor policies. He did so by careful\u00adly overhauling the economic and investment ministries, taking in well-qualified and international\u00adly acknowledged experts from the private sector and giving them a clear mandate to bring new non-oil investments and create jobs, realising that it is the businesses that attract FDIs and not the gov\u00adernments. Even more importantly, he shunned conflicts by declaring Oman neutral and not only avoid\u00aded undertaking any flashy or me\u00adga-projects but also made sure that though the kingdom remains a stakeholder, it distances itself from the management of Oman\u2019s corporate affairs and let them run on market principles whilst ensur\u00ading a fair and transparent operat\u00ading environment. The results are there for everyone to see in just 3 years with the budget deficit now at zero, a GDP growth rate nearing 5% and an unemployment level below 3% or nil in real terms!
\nThe writer is an entrepreneur and economic analyst. He can be contacted at kamal.monnoo@gmail.com<\/p>\n","protected":false},"excerpt":{"rendered":"
Dr Kamal Monnoo The current steps taken by the present government to address market distortions cum non-economic malaise are very welcome, at best these are short-term solutions that essentially provide a window to undertake broader market reforms to address the real un\u00adderlying economic issues being faced by Pakistan\u2019s economy today. Let compla\u00adcency creep in by […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[12981],"class_list":{"0":"post-358784","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-article","7":"tag-dr-kamal-monnoo"},"yoast_head":"\n